Home / Politics / Policy /  New note ban and cash withdrawal rules as of 19 December

New Delhi: The Narendra Modi government on Monday placed additional limits on deposits of old Rs500, Rs1,000 notes into bank accounts. The move is aimed at curbing anti-social elements from laundering black money into bank accounts through multiple small deposits.

Earlier, the use of the old Rs500 currency note as legal tender for paying utility bills or buying medicines and at several other exempted places stopped on 15 December. Now, the old Rs500 note can only be deposited in bank accounts or exchanged at the Reserve Bank of India (RBI).

Here is the list of rules and regulations as of 19 December:

The finance ministry on Monday said demonetised high value currencies worth more than Rs5,000 can be deposited only once into a bank account up to 30 December. The Reserve Bank of India (RBI) will separately notify further conditions.

The finance ministry has also clarified that there shall not be any limit on the quantity or value of the specified bank notes for deposits made under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana.

The current limits on cash withdrawal will be reviewed after 30 December, the last day to deposit old Rs500 and Rs1,000 currency notes, says finance secretary Ashok Lavasa.

Tax evaders can declare their unaccounted wealth till 31 March under the government’s new income disclosure scheme. The Pradhan Mantri Garib Kalyan Yojana is the second income disclosure scheme brought in by the government this year.

The government is considering easing rules on cash withdrawals, starting with cooperative banks, once 80% of the new currency is introduced into the system, a top official said on Thursday.

The RBI has imposed certain restrictions on withdrawal if more than Rs2 lakh has been deposited after 9 November in an account which has a balance of over Rs5 lakh.

The government is considering easing rules on cash withdrawals, starting with cooperative banks, once 80% of the new currency is introduced into the system, a top official said on Thursday.

The old Rs500 note will not remain a legal tender for cash transactions at utility bill payments and medical stores from 16 December.

From 31 December, the demonetised notes will be deposited only at the Reserve Bank of India offices and not at banks or post offices.

The RBI’s monthly cash withdrawal limits on Jan Dhan accounts for the KYC compliant individuals remains at Rs10,000. Limited or Non KYC compliant account holders may be allowed to withdraw Rs5,000 per month from the amount deposited.

Also read: Demonetisation’s impact by the numbers

The exchange facility has been stopped at bank branches with effect from November 25, 2016.

The cash limit of recalibrated ATMs stands at Rs2,500 per day, while other ATMs which are yet to be recalibrated, will continue to dispense Rs2,000/- till they are recalibrated.

Banks have also been advised to increase the Business Correspondents’ limit of dispensing cash to Rs2,500/- for withdrawal from bank accounts.

No ATM charges on transactions (inclusive of both financial and non-financial transactions) by savings bank customers done at their own banks’ ATMs as well as at other banks’ ATMs, irrespective of the number of transactions during the month. This ATM usage fee waiver is applicable on transactions done at ATMs from 10 November 2016 till 30 December 2016, subject to review.

Limit for cash against withdrawal slip or cheque remains at a weekly limit of 24000/- (including withdrawals from ATMs and over the counter) from the bank accounts.

Business entities having Current Accounts which are operational for last three months or more will be allowed to draw Rs50,000 per week. This can be done in a single transaction or multiple transactions. This facility has been extended to Overdraft and Cash Credit accounts and traders registered with the Agricultural Produce Market Committee (APMC) markets or mandis.

To promote payments through e-wallets, RBI decided to increase monthly transaction limit for individuals from Rs10,000 to Rs20,000.

To curb hoarding of valid currency notes and increasing its circulation, the RBI in its latest notification allowed the withdrawal of the deposited sum in Rs2,000 and Rs500 notes, irrespective of the existing cash withdrawal limits.

The amendments in the Income Tax Act provide for black money declarants to mandatorily deposit 25% of the amount disclosed in anti-poverty scheme without interest and a four-year lock-in period.

RBI imposed stiff conditions for withdrawal of up to Rs 2.5 lakh in cash from bank accounts for weddings, saying the money can be withdrawn only from the credit balance as on 8 November, the day demonetisation was announced. While notifying norms, RBI said the cash withdrawn should be used only to make payment to those persons who do not have bank accounts and the names of such recipients should be mentioned while applying for withdrawal of the cash.

More news on demonetisation

Meanwhile, the Modi government has taken a slew of measures to incentivize cashless payments.

0.75% discount on digital purchases of petrol and diesel from state-owned outlets. The move is expected to reduce cash requirement by Rs2 trillion.

0.5% discount for digital purchase of monthly and seasonal tickets for suburban rail travel. This is projected to bring cash requirement down from Rs2,000 crore to Rs1,000 crore.

Free accident insurance cover of Rs10 lakh for online purchase of tickets.

No service tax on digital transaction charges for transactions up to Rs2,000.

Customers not to bear the burden of transaction fee and MDR for payments made to central government departments, public sector firms.

10% discount on online purchase of insurance policies from state-owned insurers.

10% discount on toll payments using RFID card and fast tags.

5% off on digital payments to railways for catering, accommodation at retiring rooms.

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